Automation a challenge for jobs, basic income could be answer: Perrin Beatty

Perrin Beatty, a veteran Progressive Conservative politician in the governments of Prime Ministers’ Joe Clark, Brian Mulroney, and Kim Campbell, says automation is a challenge to the employment landscape and basic income might be part of the answer.

Now employed as CEO of the Canadian Chamber of Commerce, Beatty emphasizes he is not speaking on behalf of the Chamber.

The former government minister says that he believes the greatest difficulty for current and future employment is automation.

He points out that Amazon just launched a new convenience store called Amazon Go that has no cashiers or checkout machines and that McDonald’s has recently rolled out self-serve kiosks which eliminate the need for many cashiers.

“Autonomous vehicles are already travelling on public roads in Ontario and self-driving trucks are delivering beer for Budweiser,” he says.

Noting that the top two occupations in Canada are retail and driving-related industries, he says this means that “technological change will drive down wages.”

Beatty is willing to consider some form of guaranteed income as part of a solution and prefers the “negative income tax” model, where people are not allowed to fall below the poverty line or somewhere near there. It would be universally available in times of need.

“If we accept that it’s not fair that someone who works 40 hours per week can still be below the poverty line, then we should prop up their income,” he says.

Beatty says people generally don’t stay at minimum wage forever, so as salaries climb “we only claw back a small amount to preserve the incentive for promotions and hard work.”

“Preserving and reinforcing the attachment to the labour force means that people will eventually succeed. Once people are outside the labour force for more than a year, it becomes very difficult to return to work. That seems a recipe for creating a permanent underclass,” he says.

The former politician says he questions whether precarious work – part-time, contract, and without benefits — is widespread in Canada. He points to data from a labour force survey that shows that the number of consecutive months a person works for their current employer has been rising over the past 20 years.

“So it’s not the case that everyone is job-hopping.”

However, a Mowat Centre report from a few months ago reports that “part-time positions accounted for 89 percent of job creation in Canada between October 2015 and October 2016, and more than half of all Greater Toronto Area workers are employed in positions with some degree of precarity.”

Beatty says for young people starting their careers, temporary contract jobs have long been the norm “and this is a desirable feature of the labour market.”

“They give new workers experience in a variety of fields and it gives employers the flexibility to hire new workers and try them out without risk.”

He says this is a better system compared to what France has, “where hiring a full-time worker is like getting married – a lifelong commitment that is impossible to break up, except for a very expensive severance.”

Beatty, who previously held the Ministries of National Revenue, Defence, and National Health and Welfare, among others, acknowledges that “for older workers with families, precarious temporary work is obviously a problem.”

“So we do have to find better ways to support them.”

He says he likes the idea of a basic income that “boosts low-wage salaries” to attract more people into the labour force, since there has been a rise in discouraged workers who have given up looking for work.

And, since almost all of the new high-paying jobs in the service sector are being created in the big cities like Toronto, Vancouver and Montreal,” Beatty says a basic income “could be a big help in smaller, rural economies.”

He also says that “putting money into the pockets of the poor and working class would provide stimulus” to the economy. “Those folks are more likely to spend their income than the middle or upper classes.”

Beatty says the best thing the government can do for business is to “create a thriving, successful Canadian populace that has money to spend.”

“But let’s make sure any income guarantee raises people’s incomes without being ruinously expensive or pulling people away from the labour force. We must always remember that we have to create the wealth before we can tax it.”